Olympus 2015 Annual Report Download - page 29

Duties in Committees and Future Goals
We are raising internal compliance awareness and
introducing long-term incentives into corporate
officer compensation systems.
Unotoro: I am a member of the Compliance Committee, which
consists of myself, another outside director, an outside lawyer,
and the Chief Compliance Officer (CCO). Olympus’ current
compliance systems and frameworks, which include such
aspects as the CCO, whistle-blowing systems, and Global
Compliance Committees, were forged through discussions
among the Com
pliance Committee. With these systems in place,
this committee’s
main duty is to monitor them to make sure
they continue to function effectively. Moreover, the Compliance
Committee is tasked with preventing compliance issues from
occurring, and this requires us to be able to judge what situa-
tions may give rise to such issues. It is for this reason that an
outside lawyer has been appointed to this committee along-
side the outside directors. Initiatives to be pursued in the future
include evaluating compliance activities through employee
awareness surveys, self-assessments, and other means, and
then instituting improvements based on the findings.
Fujita: I chair the Compensation Committee. The role of this
committee is exactly as I described it in my comment in Annual
Report 2013—to create compensation systems that give
corporate officers additional incentive to pursue further improve-
ments in corporate value. As one facet of these efforts, we took
steps to increase the amount of officer compensation linked
to performance in comparison to fixed compensation.
To this end, we introduced stock options as well as short-term
incentives that reflect one year’s performance. In the future,
I hope to develop a system that provides long-term incentives
in reflection of progress toward medium- to long-term
management targets.
Operation of the Board of Directors
All outside directors are putting forth their expertise
in discussions. We need to consider delegating more
authority to the Executive Management Committee.
Unotoro: At meetings of the Board of Directors, all of the
outside directors discuss the items placed on the table based
on their differing areas of expertise and diverse perspectives.
With all participants actively bringing up issues that may have
been overlooked by the Executive Management Committee
or that relate to underlying policies, these discussions have an
intense yet engaging atmosphere, ensuring that decisions are
made only after thorough examination.
Fujita: In terms of structure, Olympus has established an
effective corporate governance system. However, whether or
not this system is truly able to function effectively is dependent
upon not only the Board of Directors and the Executive Man-
agement Committee. To ensure this effectiveness, the corporate
divisions that support these organizations must acquire special-
ized work abilities to strengthen their overall management
capabilities. Olympus has always faced issues with this regard,
but I feel that improvements have been made to this end.
Unotoro: Apparently, outside directors had been requesting
improvements in this area since even before I received my chair
on the Board of Directors. It was based on these requests, I feel,
that we are now receiving very complete explanations of meeting
agendas. So long as management maintains its constructive
approach toward the feedback of outside directors, seeing
us as fellow contributors rather than possible nuisances, I am
certain that Olympus will become an even better company.
Fujita: Ms. Unotoro brings up a very important point. It is point-
less to simply appoint outside directors as a formulaic matter;
a company must have the desire to incorporate the opinions of
these outside directors for the betterment of management.
Olympus arrived at the current corporate governance system
by reflecting on past scandals, and I therefore feel that there is
little worry of management falling into this trap. Nonetheless,
we must always be careful not to render this system ineffectual.
Changing subjects, another important issue to be considered
in the future is to what extent the Board of Directors can dele-
gate matters related to daily management to the Executive
Management Committee. When the new management team
was instituted three years ago, it was necessary for these
matters to be presented to the Board whenever possible. Today,
however, I feel that the Board of Directors needs to consider
increasing the amount of decisions delegated to the Executive
Management Committee.
Response to Japan’s Corporate Governance Code
Olympus will steadily implement all of the code’s principles
based on its Basic Policy for Corporate Governance.
Unotoro: We outside directors played an active role in preparing
the Company’s response to Japan’s Corporate Governance Code,
carefully checking over all details of related disclosure materials.
Through swift preparation, Olympus was able toannounce its
response—the Basic Policy for Corporate Governance—on the
day of the annual general meeting of shareholders held in June
2015. This was due in no small part to outside directors recom-
mending that Olympus disclose its policies in relation to the
Corporate Governance Code before other companies.
Fujita: I suspect that many companies probably began readying
their responses during the six-month grace period after their
annual general meeting of shareholders. On the other hand,
Olympus, after instituting the new management team three
years ago, went about constructing its corporate governance
system while considering all the principles that would eventually
be included in the code. For this reason, corporate governance
awareness is very well entrenched within the Company. The
Basic Policy for Corporate Governance was formulated based
on the content of the Corporate Governance Code. I believe
that Olympus’ ability to create this policy in such a short period
of time is a testament to the hard work of the management
team to date.
Unotoro: Olympus announced that it will adhere to all of the
principles of the code. Now, all that is left is to steadily push
forward with this plan.
Future Issues for Olympus
To maintain growth capacity over the long term, Olympus
will need to enhance its overall capabilities by cultivating
new businesses and strengthening head office functions.
Unotoro: The presence of women in management is still quite
low, and Olympus needs to address the issue of empowering
female employees. I sometimes speak with women working at
Olympus. Based on these interactions, I have come to feel that
while the Company has a wide assortment of systems to help
with work–life balance as well as the raising of children, there
is still a need for more substantial systems to support their
career development.
Another issue Olympus must address is cultivating new
businesses. While the Company’s Medical Business is incredi-
bly strong in the gastrointestinal endoscope field, there is no
guarantee that it will be able to maintain this strength over the
long term. If Olympus is to continue growing over the next
10 or 20 years, it is absolutely essential for the Company to
steadily nurture new businesses with the potential to become
pillars supporting its future operations.
Fujita: The competitiveness of the Medical Business is clearly
apparent if you look at R&D or manufacturing sites. Conversely,
Olympus has issues in terms of corporate functions. I feel that
more resources should be devoted to strengthening these
functions as this would enhance the Company’s overall man-
agement capabilities, which in turn would help further grow the
Medical Business as well as other business segments.
Corporate Governance
Incorporating the Opinions of Outside Directors
to Improve Management Capabilities
Olympus’ Board of Directors consists of ve highly independent outside directors, representing half of the members. The
outside directors actively engage with management by participating in various committees and taking part in discussions
at meetings of the Board of Directors. We asked outside directors Sumitaka Fujita and Keiko Unotoro about their activities
and were pleased to receive their opinions on the issues Olympus will need to address in the future.
Dialogue with the Outside Directors
Outside Director
(Chairman of Compensation Committee)
Sumitaka Fujita
Outside Director
(Member of Compliance Committee)
Keiko Unotoro
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OLYMPUS Annual Report 2015
54 OLYMPUS Annual Report 2015
Foundations Necessary for Growth